Deputy Director Yu Hong of Our Institute Accepted Interview of “China Financial News” on the Fiscal Policy of Continuous Exertion of Force to Secure Bottom Line and Guarantee the Key Fields

The budget report in this year proposed that the active fiscal policy in 2024 shall properly increase force, enhance quality and increase efficiency. The deficit rate plans to be arranged at 3% and the deficit scale at RMB 4.06 trillion, increasing by RMB 180 billion from the budget in the beginning of last year.

“Although the deficit rate in this year levels with that in last year, the statistic caliber of deficit rate in China is relatively small, and currently only covers general public budget, therefore, focusing only on deficit rate is not enough, we still need to look at the deficit scale and other debt expenditure situation.” Deputy Director Yu Hong of our institute listed a set of data while accepting interview by the reporter from “China Financial News”: the deficit scale in this year is RMB 4.06 trillion, which has surpassed RMB 4 trillion; the additional local government special debt is RMB 3.9 trillion, increasing by RMB 100 billion from that in last year, with year-on-year growth of about 2.6%; an ultra-long special treasury bonds of RMB 1 trillion is issued, which is not included in the deficit; most of the RMB 1 trillion of special national bonds issued in the fourth quarter in last year that was earmarked for supporting disaster relief, reconstruction and enhancing the capacity of disaster prevention, reduction and relief will also be used in this year.

“By comprehensively considering the factors above, through combined use of various policy tools, the purpose of the ‘Exertion of Force’ of fiscal policy is actually very obvious, it’s aiming at further exerting its counter-cyclic regulation role, maintaining proper scale of expenditure, and promoting the continuous recovery of the economy.” Yu Hong said.

Yu Hong believed that the fiscal authority has also reserved room of policy for cross-cycle regulation. For example, China will begin to continuously issue ultra-long special treasury bonds from this year, which will be specially used in implementation of major national strategies and the construction of security capacity in key fields. “Based on the changes of revenue situation, it can’t be ruled out that there will be necessary to dynamically adjust deficits and debts in the future. For example, in the end of last year, the central fiscal authority timely and decisively issued RMB 1 trillion of special treasury bonds based on the changes of situation, and raised the deficit rate to 3.8%.” She said.

As for the fiscal expenditure arrangement in this year, Yu Hong summarized it as “Securing the Bottom Line and Guaranteeing the Key Fields”. Firstly, the central fiscal authority strengthens the security of local fiscal resources, and put the “Three Guarantees” of grass-roots level in the priority of fiscal security. In this year, the transfer payments from central government to local governments is arranged at RMB 10.2 trillion, which maintains certain scale, and with same-caliber growth of 4.1%. Secondly, in key fields such as science & technology, education, employment, social security, etc., the degree of input has been continuously increased. In which the special funding by the central fiscal authority for rebuilding of industrial infrastructure and high-quality development of manufacturing is RMB 10.4 billion, which will primarily support the accelerated breakthrough of weakness in basic products and core technologies, so as to strengthen the resilience and competitiveness of industrial chain and supply chain. In the aspect of education input, the central expenditure on local-level education is arranged at RMB 164.9 billion, with growth of 5%, and special input and support have been made on several key fields. In the aspect of science & technology input, the central expenditure on local-level science & technology is arranged at RMB 370.8 billion, with growth of 10%, which mainly focus on basic research, application basic research, national strategic science & technology missions. Lastly, in the aspect of employment, in this year, China will strengthen the linkage between fiscal policy and employment policy, and promote the capacity of employment. The central fiscal authority has arranged special employment subsidy fund of RMB 66.7 billion, which will mainly be used in supporting local governments to enhance the capability of public employment services, and implement and specifically enforce the employment & entrepreneurship supporting policies.

Yu Hong noticed that the fiscal expenditure in livelihood guaranteeing fields continues to maintain growth. For example, the per-capita fiscal subsidy standard of urban-rural resident basic medical insurance has been increased by RMB 30 and reached RMB 670 per person per year; and the minimum standard of monthly urban-rural resident basic pension has been increased by RMB 20.